WRAPUP 2-Southwest, JetBlue post profits; United loss narrows

* Southwest, United results top estimates

* JetBlue profit of 5 cents/shr vs. estimate 10 cents

* Airlines stress need to end air traffic control furloughs

April 25 (Reuters) - Southwest Airlines and JetBlue
Airways on Thursday reported profits for the first
quarter, long the weakest period for carriers, but industry
leader United Continental posted a loss, as operating
costs rose.

Revenue for the quarter rose at the three carriers, but the
numbers were a mixed bag as far as Wall Street was concerned,
with Southwest and United beating estimates but JetBlue falling
short.

Jim Corridore, an equity analyst with S&P Capital IQ, viewed
the revenue numbers positively. "It's clear that the revenue
environment is still healthy and companies are getting a bit of
an advantage from lower fuel expenses which is more than
offsetting any weakness," he said.

The airlines, with an eye on the current quarter, expressed
concern about the effect of federal budget cuts known as
sequestration on passenger demand, and they stressed the need to
end U.S. air traffic staff cuts that began this week and have
caused flight delays at airports.

"This is government not working - capital letters
exclamation point - when we're sitting here holding the
traveling public hostage in the midst of sequestration," JetBlue
Chief Executive Dave Barger said during an earnings conference
call.

U.S. Senate leaders, concerned about sour public sentiment
over the flight delays, on Thursday worked on a plan to try to
resolve the furlough issue.

The Federal Aviation Administration started furloughing air
traffic controllers on Sunday. The trade group for U.S. airlines
has filed suit seeking a halt to the furloughs, which carriers
have estimated could lead to hundreds of millions of dollars in
lost revenue.

"We are disappointed that the FAA chose this path, that
maximizes customer disruptions and damage to airlines, instead
of choosing a less disruptive method to comply with the budget
obligations," United Continental Chief Executive Jeff Smisek
said during a conference call.

REVENUE GAINS IN SEASONALLY WEAK PERIOD

Net income at Southwest was $59 million, or 8 cents a share,
for the first quarter, down 40 percent from $98 million, or 13
cents a share, a year earlier.

The traditional low-fare leader had profit-sharing expense
and special items including acquisition charges in the quarter.
Year-earlier results were also aided by gains of $170 million,
mainly tied to fuel-hedge contracts, compared with gains of $46
million in the latest period.

Excluding items, profit was 7 cents a share, compared with 2
cents a share expected by analysts, according to Thomson Reuters
I/B/E/S. Its revenue rose 2 percent to $4.1 billion.

Southwest is looking to raise revenue by more than $1
billion this year.

On Thursday, for instance, Southwest announced details of a
new policy designed to cut the number of empty seats. Under the
initiative, which will start with bookings next month for
flights taking place in September, passengers who don't show up
will forfeit certain restricted fares if they failed to cancel
their reservations before departure.

United Continental, currently the world's biggest carrier,
posted a loss of $417 million, or $1.26 per share. Adjusted for
merger-related and other charges, the loss was 98 cents a share,
compared with a loss of $1.10 expected by analysts. Revenue rose
1.4 percent to $8.7 billion, but operating costs came to nearly
$9 billion, as expenses for salaries climbed 12 percent.

Southwest and JetBlue cautioned that a key revenue measure,
unit revenue, would weaken in April, but both added May was
looking stronger.

"We do expect the economy is going to recover from the soft
patch it's currently in and continue to grow," Corridore said.
"It should be a nice summer period for the industry."

Other airlines have noted weaker near-term revenue trends.
Delta Air Lines said this week that U.S. government
spending cuts and lighter demand from leisure travelers would
hurt unit revenue in April, while US Airways said demand
from business passengers had been pressured since the start of
sequestration.

Earlier this week, Delta and US Air reported
higher-than-expected earnings.

Shares of Southwest ended unchanged at $13.42 on Thursday,
while of United Continental fell 1.6 percent to $30.89. JetBlue
share shed 4.6 percent to $6.85.